SEED extends lending reach to R.I.

Friday

Dec 26, 2008 at 6:00 PMJan 1, 2009 at 12:00 AM

TAUNTON, Mass. — A recent vote by the Southeastern Economic Development Corp.'s Board of Directors will have the Taunton-based non-profit corporation spreading its business micro-loan lending wings into the Ocean State.

TAUNTON, Mass. — A recent vote by the Southeastern Economic Development Corp.'s Board of Directors will have the Taunton-based non-profit corporation spreading its business micro-loan lending wings into the Ocean State.

SEED Executive Director Maria Gooch-Smith said SEED has been asked by the US Small Business Administration to assist small businesses in Rhode Island in acquiring micro-loans. One of SEED's five loan programs, microloans typically range between $5,000 and $35,000, and can be used for working capital, leasehold improvements, machinery and equipment, and furniture and fixtures. Eligible businesses include manufacturing, retail, wholesale and service businesses, usually with five or fewer employees.

Additional details will be released in coming months, but SEED recently took steps to get the program started in Rhode Island by applying for a $500,000 SBA loan.

"We're hoping to make these loans available to many businesses. This is a loan program that businesses obviously need and with the economy the way it is, small loans under $100,000 are very hard to come by for a lot of business where lines of credit have been closed at banks," said Gooch-Smith.

This is not SEED's first endeavor into Rhode Island, where it already writes SBA 504 loans to the state up to $100,000, which provide up to 90 percent financing for the purpose of purchasing real estate or machinery.

For the micro-loan program, SEED will have a limit of $3 million worth of funds to lend for the R.I. microloan program in which they can continue to go back to the SBA for additional $500,000 increments. Gooch-Smith said the SBA makes the loans available to SEED for 4 percent, which they then turn around to businesses, at a modest 7 percent rate.

"These are loans for start-ups, or businesses with very little collateral, very risky kinds of loans that banks aren't going to make," said Gooch-Smith. "These are businesses that have been using their own credit cards to make purchases or a home equity line to fill the gaps. But that is a whole different ball game now with many people owing more on their houses then they are worth."

Gooch-Smith said with Rhode Island's unemployment number hovering at 9.3 percent-the second worse in the country, there is obviously a need to help small businesses and that time is now. Despite the risk in many of the loans they sign, she said SEED has only charged off a total of $2,000 in the last decade, mostly because of they can stay in close touch with businesses to assure that they have access to help at every turn. "We work with people, considering ourselves like a small bank, where we visit the businesses when we can sense that they are in trouble," said Gooch-Smith. "Our kind of lending is very active."

Gooch-Smith said with Providence less than a half hour away, and the need for business assistance never greater, she thinks the new micro-loan program in R.I. will be a big hit. "We're looking to meet the demand for business financing, that's what we're here for," said Gooch-Smith. "We're into gap financing and there are a lot of gaps out there right now."